FXStreet (Guatemala) – Sam Bullard, analyst at Wells Fargo noted that the US Consumer Price Index (CPI) rose 0.4 percent in May, largely on the back of a rebound in gasoline prices.
Key Quotes:
“Core prices rose a more-modest 0.1 percent, but the trend has firmed since the start of the year.”
“Over the past year, CPI inflation has been flat.”
“However, as evidenced by today’s report, the more recent trend is upward. CPI is now increasing at a 3.2 percent annualized rate over the past three months, which should quickly push up the year-over-year rate of change once the low readings derived from the plunge in oil prices drop out of the comparisons.”
“Fed officials are not yet confident in the sustainability of the recent turnaround in inflation.”
“Despite the rate of headline and core inflation picking up heading into this week’s meeting, the Federal Open Market Committee statement and Chair Yellen only made note of the stabilization in energy prices and not the strengthening in core inflation.”
“With May’s data now in hand, core CPI is increasing at a 2.5 percent three-month annualized rate, while readings on producer price and import price inflation have also firmed.”
“We believe that there is sufficient time between now and September for FOMC officials to become confident that inflation is on track to return to more desirable levels, now that oil prices and the dollar are more stable and the consumer picture continues to steadily improve”.
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